ALL THE TOOLS FOR A SUCCESSFUL TRANSITION
It seems so easy said nowadays but we can assume that this redeployment shouldn’t be surprising. First of all, Minas Gerais contains the largest number of Federal Universities such as UFMG (Federal University of Minas Gerais) and it is the home of the best universities in Brazil. Combined with a willingness of the government to develop entrepreneurhsip, the presence of big corporates such as Google’s R&D center, industrial wealth, we can claim that Minas Gerais owned an entrepreneurial powder keg in its heart : Belo Horizonte. Finally, the culture that is an essential ingredient has played a key role in this upheaval. Mineiros have the reputation to be open-minded as well as helpful towards each others, which pushed many individuals to take risky initiatives feeling surrounded by brilliant and available people. This could be viewed as the spark that lighted the powder keg through synergies between the different actors. All things considered, it resulted in successful initiatives such as SEED MG (a government-owned equity-free accelerator program) or Microsoft Innovation Center which fosters innovation for startups inside PUC Minas University. The only cultural drawback that could be seen is the reluctance of a conservative part of the population as well as the alternation in government. Nevertheless, the community acted so well that none could stop this skyrocketing ecosystem.
THE SAN PEDRO VALLEY FROM JOKE TO FAME
Any entrepreneur in Brazil knows about Belo Horizonte’s success story. Its most famous illustration is the informal San Pedro Valley that gained official recognition. A few years ago, 4 entrepreneurs that were at the basis of the ecosystem started to joke around « the San Pedro Valley ». The reason why? It was the name of their neighborhood. A calm and residential neighborhood that had nothing in particular. Actually, all this started when these entrepreneurs launched their start-ups and won several national prizes. A TechCrunch journalist relayed one of their tweets and the buzz started. A WhatsApp group dedicated to entrepreneurs of Belo Horizonte was created afterwards. That was the milestone of a very supportive community. With now more than 200 entrepreneurs on the group, it is more dynamic than ever. No matter who you are, it is very easy to reach anyone from the ecosystem regarding any kind of advice. We could even experience it ourselves when Davi Reis from WorldSense asked on the group who was available to meet us and talk about the ecosystem. A couple minutes later, we received tons of messages from people that were keen on helping us and sharing their experience. Moreover, the strength of the San Pedro valley relies on its informality and thus its accessibility. As Davi says « the only condition to be part of the San Pedro is to say you are from the San Pedro Valley ». Furthermore, they even suceeded in gaining official recognition with for instance preferential interest rates for bank loans. All in all, this community is undoubtedly the strength of Belo Horizonte’s ecosystem that many other cities should take as an example. Independently from their fame, entrepreneurs need to understand how profitable for them and the ecosystem it can be to remain available for others.
A BRIGHT FUTURE DESPITE SOME INTEROGATIONS
It may be worthwhile to consider that Belo Horizonte’s ecosystem still has room for improvement. Its influence shouldn’t be exaggerated even if the beginning of this story is full of hope. Despite interesting initiatives regarding investment such as business angels mentionned above, there is a lack of funds available for later stage. Series A investments often come from São Paulo-based VC funds or from overseas, which makes things a little trickier. Nevertheless, some major Brazilian funds such as Inseed Investimentos or Confrapar have offices in Minas Gerais. Besides, José César Martins famous and inspiring entrepreneur from Porto Alegre says not to worry about finding investment : « If you are good, investors will find you ». This quote could be really adapted to Belo Horizonte whose ecosystem begins really shining on the country’s economy. And there are resources in the country. After the first exits, funds will be availabale. Therefore, other issues are more worrying : both political instability and bureaucracy. Litteraly no local entrepreneur to whom we asked about the weaknesses of the ecosystem didn’t tell us about the weight that administrative procedures can have on a Brazilian-based start-up. Drew Beaurline, an American entrepreneur that came there to launch Construct Latam with SEED told us that it took him not less than a year just to register his company. Furthermore, a recent event witnesses for the vulnerability of governement programs such as SEED. After the second batch, Minas Gerais swinged from Antônio Anastasia (PSDB) to Alberto Pinto Coelho Jr (PT). The new government led by the Labor Party soon showed its reluctance towards the pro-entrepreneurship measures taken by the former social-democrats. They even decided to close the SEED program from one day to another. Needless to say that SEED and its entrepreneurs, backed by the whole San Pedro Valley started demonstrating and quickly showed the advantages that it brings to the whole economy at a time when it was necessary to prepare a transition. The government gave up and kept the program running. However, this truly shows the impact that politics could have on this ecosystem. Next time, they might not give up. Finally, let’s hope that when it happens again, the ecosystem will be strong enough that no step back could be taken on this incredible entrepreneurial mindset.